A Candid Discussion with Lloyd J. Dumas

Dr. Lloyd Jeff Dumas is a Professor of Political Economy, Economics, and Public Policy in the School of Economic, Political and Policy Sciences at the UT-Dallas. Dr. Dumas sat down with Reza Akhlaghi, Senior Writer at FPA, to discuss his new book, “The Peacekeeping Economy: Using Economic Relationships to Build a More Peaceful, Prosperous, and Secure World“. Dr. Dumas is also the author of ‘The Technology Trap‘.

One of the key assertions in your book is the viability of providing national security without recourse to military force and the enormity of lost opportunities in every war. Please elaborate on this central argument.

The idea that security is mainly a matter of the strength of military force is widespread, but it is wrong. Security is and always has been primarily a matter of relationships. Consider the fact that during the Cold War the US spent a huge amount of time and trillions of dollars trying to protect the country against a devastating nuclear attack from the Soviet Union, but virtually no time or money worrying about a devastating nuclear attack from France or Britain, both of which had the capacity to deliver such an attack. The reason for that is obvious: the US had a hostile relationship with the Soviet Union, but a strong friendly relationship with Britain and France. Further, the US is now preoccupied with the threat to US security posed from the possibility of a hostile Iran developing nuclear weapons, while not at all concerned about the nuclear arsenal of Israel.

I argue that if we build the sort of balanced, mutually beneficial, “partner” economic relationships that generate strong positive gains for all parties involved, we can create powerful positive incentives for nations (and subnational groups) to settle or at least manage their conflicts short of war — precisely because they don’t want to damage these relationships from which they are gaining so much. Over the long term, it is possible to construct such a “peacekeeping economy”, based on a handful of simple and practical principles including balanced economic relationships and emphasis on development.

The predecessor organizations that led to today’s European Union embodied these precepts and were established specifically with an eye toward preventing future wars among a group of nations that had been at each other’s throats for centuries. For more than 60 years, the EU has demonstrated that this approach is both pragmatic and effective.

You argue in your book that “our security paradigms have much to do with choice and incentive than with force and coercion”. Based on this argument, would you say that in the wake of 9-11 attacks we could have solved the terrorism activities emanating from the Taliban-ruled Afghanistan without launching military strikes?

I said that economists’ paradigms for influencing human behavior have more to do with choice and incentive than with force and coercion, and that this point of view can be usefully applied to developing more effective and less costly security systems. I first want to emphasize that this is a most effective approach for strengthening security and reducing war over the longer term, not an immediate solution to acute threats. In this, it is analogous to arguing that human health is greatly improved by a proper diet and exercise regime. That is true — and very important — but it doesn’t give much guidance as to how to treat a patient with acute influenza.

In the long run, terrorism can be effectively fought by economic and political development because most terrorist groups draw their recruits and other support from those who consider “their people” (however they define the group they feel a part of) economically marginalized and/or politically humiliated. In my view, terrorism is never justified. But no matter how perverted it seems, people who feel connected to economically marginalized and politically humiliated groups may see terrorism as an available means for striking back against those who have treated their people with such disdain. Raising the level of economic wellbeing of “their people” (as economic development does) and opening up avenues for meaningful political participation by ‘their people” (as political development does) undercuts groups that engage in terrorism because it takes away their “grand cause”, making it much harder to recruit operatives and garner other forms of support.

In the short term, terrorism is most effectively fought with first-rate intelligence and police work, not military action. Occasionally, narrowly targeted quick military strikes (such as that which killed Osama Bin Laden) may be useful, but longer-term military campaigns and occupations are likely to create as many or more new terrorists as they destroy.

What are the key mechanisms needed in bringing about, to use your words, “properly structured economic relationships that cost far less security”?

A peacekeeping economy can be built through a variety of mechanisms (I discuss some 20 such approaches in Chapter 4 of the book), some of which are best implemented by the private sector, some by the government, and some by the public at large. For brevity, let me focus on one particularly salient approach that can be used by ordinary citizens — consumer boycotts. In the past, campaigns of this sort have succeeded in pressuring even very large companies to engage is less exploitative business practices, to improve unhealthy and dangerous working conditions for their workers, to be more environmentally sensitive — all of which are relevant to building the sort of economic relationships that can help keep the peace. Such campaigns have for example succeeded in changing the business practices of Nike (in the 1990s) and Wal-Mart, Burger King, and Home Depot (in the 2000s), There is some suggestion that consumer-based actions may need to be brought against Apple today to push them to correct the horrendous working conditions that have been recently alleged to prevail in its contractors’ manufacturing facilities in China.

How do you see current events in the Arab world? Do you think the region’s new governments will have the capacity to lead the region to a more economically interdependent path, or geopolitical calculations and rivalries will continue to bar them from doing so? What can the world do to steer the Middle East toward a more economically interdependent path?  

The so-called Arab Spring that began in the winter of 2011 is, on the whole, an extremely encouraging set of events. It is worth noting that many of the grievances that have led to this turbulence were and are rooted in the lack of economic opportunity and the reality of political impotence that combined to paint a bleak picture of the present and the foreseeable future (particularly for the young). Both of these problems can be successfully addressed by the kind of economic and political development that is integral to economic peacekeeping.

Especially hopeful is the extent to which the public has witnessed the power and potential of coordinated nonviolent action. This approach to bringing down dictators is much more effective and empowering — and more likely to move in the direction of establishing more truly democratic regimes — than military approaches to regime change. Chapter 9 of my book analyzes the value of nonviolent mass action and its compatibility with economic peacekeeping.

Just as no approach to achieving security is successful all the time — certainly military approaches fail often enough — nonviolent protest does not always work. It remains to be seen how many of these uprisings will ultimately succeed. But they clearly represent movement in the right direction that could be further enhanced, strengthened, and made more resilient by the establishment of a web of balanced mutually beneficial economic relationships within and between the nations of the Middle East — most assuredly including both Iran and Israel.

What do you make of the current state of economic relationship between the United States and China? Do you think the high degree of the economic interdependence between the two countries is an insurance policy against military conflict?

To the extent that the mutually beneficial character of the current interdependent economic relationship between the US and China is continued and strengthened. It will be helpful in preventing military conflict between them.

What is your reaction to the recent report by the Institute for Economics and Peace, which provides an overview of the macroeconomic effects of government spending on war and the military since World War II.  

I have seen the IEP report, but have not yet had the chance to read it closely. But the negative macroeconomic effects of military spending are not simply a feature of how large the total military spending is relative to the size of the economy (GDP). It is much more critical to look at the kinds of economically productive resources that are diverted to the economically unproductive military sector. In the US, for example, decades of using a serious fraction of the nation’s capacity for technological development (its engineering and scientific talent) for the purpose of military R&D have put US industry behind many of its foreign competitors. The slowing of the rate of technological progress in ordinary civilian commercial industry has undermined the US economy at its key historic source of strength, and played a critical role in rendering much of US industry less competitive with foreign rivals. This has cost Americans literally millions of well-paying jobs, and is a key explanation for the stagnation of the standard of living of middle and lower income Americans since the mid-1970s.

The same process of diversion of key productive economic resources (perhaps in a different specific form) has caused even more pain in less wealthy heavy military spending nations.

For economic peacekeeping to be accepted, you cite the importance of overcoming political and economic resistance rooted in vested interests from those who believe that their economic and political livelihood are at stake in a transition from military-oriented security to civilian-oriented economy. Yet over the past three decades millions of jobs have migrated to overseas markets, negatively impacting thousands of communities in the United States. How do you explain this dichotomy and what can be done to convince those who have high stakes in a military-oriented security structure?

It is important to make the mechanisms that connect high levels of military spending to these economic woes (see my answer above) more visible to the public. I am quite sure that not only the public at large, but much of civilian industry, would support a major shift away from a security system dependent on high levels of military spending toward an alternative like economic peacekeeping if these connections were made clear to them. I am always looking for more effective ways to get this message to a wider audience.

 In a transition from a military-based security structure to one of civilian, we are talking about revitalizing industries that are primarily and, in some sectors, heavily manufacturing based. In a global economy based on abundance of cheap labor in the developing world, why should leading CEOs in the military industrial complex in developed nations (i.e. United States and France) consider migration to manufacturing products that are intensely cost competitive?

There is a great deal of money to be made by manufacturing quality products efficiently enough (with high productivity, and thus lower cost per unit) to make them available at prices low enough to make them competitive with foreign producers. This was what the US (and other industrialized nations, such as Japan and Germany) did so well for so long, even in competing with the products of foreign producers operating with much cheaper labor. But no one is going to pour money over the MIC like the Pentagon (or its equivalent elsewhere), so those CEOs will resist change until military budgets are cut and they are thus faced with a different set of choices.

What are your thoughts on the future of Euro as a single currency?

It is difficult for a group of basically autonomous countries to operate within the framework of a single currency unless their other macroeconomic policies and policy needs are somehow harmonized. The Eurozone attempted to operate its single monetary unit within a harmonizing framework of fiscal constraints, but did not firmly establish proper transparency, accountability and enforcement mechanisms among its members. The euro may well survive, perhaps with a smaller number of nations as members of the currency union. But one way or the other, I do not believe that the continuation of the euro as a single currency is a critical matter — certainly not critical to the functioning of the EU as a peacekeeping economy within its own political boundaries.

Has globalization so far had a positive impact on the development of demilitarized security?

In some ways it certainly has, but (as I discuss in some detail in Chapter 6) in other important ways the particular form that globalization has taken is not as supportive of peacekeeping economic principles as it should or could be. For example, the WTO as an entity has the power to establish trade rules that are enforceable and with which there has been wide compliance. But these rules tend to favor more developed countries (consider the collapse of the so-called “Doha Round of trade negotiations aimed at balancing the situation with respect to developing countries). And certain WTO principles have the effect of interfering with environmental progress.